<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule
14a-12
[ ] Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
CHOICEONE FINANCIAL SERVICES, INC.
(Name of Registrant as Specified in Its Charter)
- ---------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
--------------------------------------------------------------------
<PAGE>
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
--------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------
(3) Filing party:
--------------------------------------------------------------------
(4) Date filed:
--------------------------------------------------------------------
<PAGE>
[CHOICEONE FINANCIAL SERVICES, INC. LOGO]
109 EAST DIVISION
SPARTA, MICHIGAN 49345
April 1, 1998
To Our Shareholders:
The Annual Meeting of the Shareholders of ChoiceOne Financial Services,
Inc., Sparta, Michigan, will be held at the following location and date:
Sparta Ridgeview Elementary School Gymnasium
557 South State Street
Sparta, Michigan 49345
Thursday, April 30, 1998
6:30 p.m. Dinner - 7:30 p.m. Annual Meeting
The purpose of the meeting is set forth in the attached "Notice of Annual
Meeting of Shareholders."
Please plan to join us prior to the meeting for an informal sit-down dinner
to be served at 6:30 p.m. Shareholders holding stock in single ownership
form are cordially invited to bring a guest. To assist us in our planning,
please complete and return the enclosed reservation card by Friday, April
17, 1998.
The following Proxy Statement and enclosed form of proxy are being
furnished to holders of ChoiceOne Financial Services, Inc. Common Stock on
and after April 1, 1998. PLEASE BE SURE TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. A
proxy may be revoked at any time before it is exercised and shareholders
who are present at the meeting may withdraw their proxy and vote in person
if they wish to do so. Proxies must be signed by all owners as their names
appear on the proxy.
Please join us at the 1998 Annual Meeting on the evening of April 30. We
look forward to seeing you there.
Sincerely,
/s/ Jae M. Maxfield
Jae M. Maxfield
President and Chief Executive Officer
<PAGE>
[CHOICEONE FINANCIAL SERVICES, INC. LOGO]
109 EAST DIVISION
SPARTA, MICHIGAN 49345
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- ---------------------------------------------------------------------------
The annual meeting of shareholders of ChoiceOne Financial Services,
Inc. will be held in the Gymnasium at Sparta Ridgeview Elementary School,
557 South State Street, Sparta, Michigan, on Thursday, April 30, 1998, at
7:30 p.m. local time, for the following purposes:
1. To elect directors.
2. To approve and adopt an Amendment to the Restated Articles of
Incorporation to increase the number of authorized shares of
Common Stock.
3. To transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 16, 1998, are
entitled to notice of and to vote at the meeting and any adjournment of the
meeting.
By Order of the Board of Directors
/s/ Linda R. Pitsch
Linda R. Pitsch
Secretary
April 1, 1998
----------------------------------------------------------------------
It is important that your shares be represented at the
meeting. Even if you expect to attend the meeting,
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
----------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
CHOICEONE FINANCIAL SERVICES, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 30, 1998
This Proxy Statement and the accompanying form of proxy are being
furnished to holders of common stock, without par value ("Common Stock"),
of ChoiceOne Financial Services, Inc. (the "Corporation") on and after
April 1, 1998, in connection with the solicitation of proxies by the
Corporation's Board of Directors to be voted at the annual meeting of the
Corporation's shareholders (the "Annual Meeting") to be held on April 30,
1998, and any adjournment of that meeting. The Annual Meeting will be held
in the Gymnasium at Sparta Ridgeview Elementary School, 557 South State
Street, Sparta, Michigan, at 7:30 p.m. local time.
The purpose of the Annual Meeting is to consider and vote upon the
following matters: (i) election of directors; and (ii) approval and
adoption of an Amendment to the Restated Articles of Incorporation to
increase the number of authorized shares of Common Stock. If a proxy in
the form distributed by the Corporation is properly executed and returned
to the Corporation, the shares represented by that proxy will be voted at
the Annual Meeting and any adjournment of that meeting. If a shareholder
specifies a choice, the proxy will be voted as specified. If no choice is
specified, the shares represented by the proxy will be voted for the
election of all nominees of the Board of Directors named in this Proxy
Statement and for approval and adoption of the proposed Amendment to
Restated Articles of Incorporation. The Corporation's management does not
know of any other matter to be presented at the Annual Meeting. If other
matters are presented, all shares represented by the proxy will be voted in
accordance with the judgment of the persons named as proxies with respect
to those other matters.
A proxy may be revoked at any time prior to its exercise by written
notice delivered to the Secretary of the Corporation. A proxy may also be
revoked by attending and voting at the Annual Meeting.
Solicitation of proxies will be made initially by mail. Directors,
officers and employees of the Corporation and ChoiceOne Bank (the "Bank")
also may solicit proxies in person, by telephone or by other means without
additional compensation. In addition, proxies may be solicited by nominees
and other fiduciaries who may mail material to or otherwise communicate
with the beneficial owners of shares held by them. All expenses of
solicitation of proxies will be paid by the Corporation.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors has nominated the following four persons for
reelection to the Corporation's Board of Directors for terms expiring at
the annual meeting of shareholders to be held in 2001:
Frank G. Berris
Lawrence D. Bradford
Lewis G. Emmons
Stuart Goodfellow
Each nominee is presently a director of the Corporation whose term
will expire at the Annual Meeting. Six other directors are serving terms
that will expire in 1999 and 2000. It is the intent of the persons named
in the accompanying proxy to vote for the election of the four nominees
listed above. The proposed nominees are willing to be elected and to
serve. In the event that any nominee is unable to serve or is otherwise
unavailable for election, which is not contemplated, the incumbent Board of
Directors may or may not select a substitute nominee. If a substitute
nominee is selected, all proxies will be voted for the person so selected.
If a substitute nominee is not selected, all proxies will be voted for the
election of the remaining nominees. Proxies will not be voted for a
greater number of persons than the number of nominees named above.
A plurality of the shares represented in person or by proxy and voting
on the election of directors is required to elect directors. For the
purpose of counting votes on the election of directors, abstentions, broker
non-votes and other shares not voted will not be counted as shares voted,
and the number of shares of which a plurality is required will be reduced
by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
APPROVAL AND ADOPTION OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors proposes to amend Article III of the
Corporation's Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock from 1,000,000 shares of Common Stock to
2,000,000 shares of Common Stock. The purpose of the amendment is to
provide additional shares for future issuance.
As of March 16, 1998, 513,325 authorized shares of Common Stock were
issued and outstanding. The Board of Directors has approved a two-for-one
stock split payable on May 22, 1998 to shareholders of record as of April
30, 1998, contingent upon shareholder approval of the proposed amendment.
-2-
<PAGE>
The Board of Directors believes that it is advisable to have the
additional authorized shares available for possible future stock splits and
dividends, employee benefit plans, equity-based acquisitions and other
corporate purposes that might be proposed in the future. The Board of
Directors has authorized the issuance of shares for such purposes in the
past. However, the Corporation has no present plans or proposals to issue
shares that would be authorized by the proposed amendment.
Management continues to seek favorable acquisition opportunities. It
has in the past had, and anticipates that it will from time to time in the
future have, discussions with other organizations that might be interested
in being acquired. Authorized but unissued shares of Common Stock, or
funds raised in a public offering of shares, may be used for these
purposes.
All of the additional shares resulting from the increase in the number
of authorized shares of the Corporation's Common Stock would be of the same
class, with the same dividend, voting and liquidation rights, as the shares
of Common Stock presently outstanding. Shareholders have no preemptive
rights to acquire shares issued by the Corporation under its existing
Restated Articles of Incorporation, and shareholders would not acquire any
such rights with respect to such additional shares under the proposed
amendment to the Corporation's Restated Articles of Incorporation. Under
some circumstances, issuance of additional shares of Common Stock could
dilute the voting rights, equity and earnings per share of existing
shareholders.
Common Stock was previously designated as having a par value of $10
per share. On February 11, 1998, the Board of Directors amended the
Corporation's Restated Articles of Incorporation to delete references to
par value. The concept of par value has no legal significance under the
Michigan Business Corporation Act, as amended.
If the proposed amendment is adopted, the newly authorized shares
would be unreserved and available for issuance. No further shareholder
authorization would be required prior to the issuance of such shares by the
Corporation.
This increase in authorized but unissued Common Stock could be
considered an anti-takeover measure because the additional authorized but
unissued shares of Common Stock could be used by the Board of Directors to
make a change in control of the Corporation more difficult. The Board of
Directors' purpose in recommending this proposal is not as an anti-takeover
measure, but rather for the reasons discussed above.
The first paragraph of Article III of the Corporation's Restated
Articles of Incorporation, as amended, would read as follows:
-3-
<PAGE>
The total authorized capital stock of the corporation
is Two Million One Hundred Thousand (2,100,000) shares
of stock divided into two classes as follows:
A. Two Million (2,000,000) shares of common stock,
which shall be called "Common Stock."
B. One Hundred Thousand (100,000) shares of preferred
stock, which shall be called "Preferred Stock."
The affirmative vote of holders of a majority of the outstanding
shares of Common Stock is required to approve and adopt the proposed
amendment to the Corporation's Restated Articles of Incorporation. For the
purpose of counting votes on this proposal, abstentions, broker non-votes
and other shares not voted have the same effect as a vote against the
proposal.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE CORPORATION'S
RESTATED ARTICLES OF INCORPORATION
VOTING SECURITIES
Holders of record of Common Stock at the close of business on March
16, 1998, will be entitled to vote at the Annual Meeting on April 30, 1998,
and any adjournment of that meeting. As of March 16, 1998, there were
513,325 shares of Common Stock issued and outstanding. Each share of
Common Stock is entitled to one vote on each matter submitted for
shareholder action.
As of March 16, 1998, no shareholder is known to the Corporation's
management to have been the beneficial owner of more than 5% of the
outstanding shares of Common Stock.
The following table sets forth information concerning the number of
shares of Common Stock held as of December 31, 1997, by each of the
Corporation's directors and nominees for director, each of the named
executive officers and all of the Corporation's directors, nominees for
director and executive officers as a group:
-4-
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF COMMON STOCK<F1>
----------------------------------------
SOLE VOTING SHARED
AND VOTING OR TOTAL PERCENT
NAME OF DISPOSITIVE DISPOSITIVE BENEFICIAL OF
BENEFICIAL OWNER POWER POWER<F2> OWNERSHIP CLASS
---------------- ----------- ----------- --------- -------
<S> <C> <C> <C> <C>
Frank G. Berris 4,889 -- 4,889 <F*>
Lawrence D. Bradford -- 5,870 5,870 1.1%
William F. Cutler, Jr. -- 3,661 3,661 <F*>
L. Edmond Eary, Jr., M.D. 2,557 -- 2,557 <F*>
Lewis G. Emmons 4,711 -- 4,711 <F*>
Stuart Goodfellow 6,717 -- 6,717 1.3
Jae M. Maxfield 2,109<F3> -- 2,109<F3> <F*>
Jon E. Pike 1,326 -- 1,326 <F*>
Linda R. Pitsch -- 188 188 <F*>
Andrew W. Zamiara 306 662 968 <F*>
All directors and
executive officers
as a group 22,615<F3> 10,709 33,324<F3> 6.5%
<FN>
____________________________
<F*> Less than 1%.
<F1> The numbers of shares stated are based on information furnished by
each person listed and include shares personally owned of record by
that person and shares that under applicable regulations are
considered to be otherwise beneficially owned by that person. Under
these regulations, a beneficial owner of a security includes any
person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power
or dispositive power with respect to the security. Voting power
includes the power to vote or direct the voting of the security.
Dispositive power includes the power to dispose or direct the
disposition of the security. A person is also considered the
beneficial owner of a security if the person has a right to acquire
beneficial ownership of the security within 60 days.
<F2> These numbers include shares as to which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust or other contract or property right, and shares held
by spouses and minor children over whom the listed person may have
influence by reason of relationship.
-5-
<PAGE>
<F3> These numbers include 1,250 shares of Common Stock that may be
acquired by Mr. Maxfield through the exercise of stock options within
60 days of December 31, 1997.
</FN>
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
The Corporation's Board of Directors is divided into three classes,
which are as nearly equal in number as possible. Each class of directors
serves a successive three-year term of office. Directors who are not
employees of the Corporation may not serve for more than five consecutive
three-year terms, nor may they serve after attaining age 70.
Four members of the present Board of Directors are standing for
reelection. Six other directors are serving terms that will expire in 1999
and 2000.
Biographical information concerning the Corporation's directors and
executive officers, including the four nominees who are nominated for
election to the Board of Directors at the Annual Meeting, is presented
below. Except as otherwise indicated, all directors, nominees for director
and executive officers have had the same principal employment for over five
years. All executive officers are appointed annually and serve at the
pleasure of the Board of Directors. All of the directors of the
Corporation also serve as directors of the Bank.
NOMINEES FOR ELECTION AS DIRECTORS TO TERMS EXPIRING IN 2001
FRANK G. BERRIS (age 50) is President of and owns American
Gas & Oil, Inc., a distributor of petroleum products and operator
of gas stations. Mr. Berris is also Past President of West
Michigan Oilman's Club and a member of the Michigan Petroleum
Association/Michigan Association of Convenience Stores. Mr.
Berris has been a director of the Corporation and the Bank since
August 1991.
LAWRENCE D. BRADFORD (age 58) is President of ChoiceOne
Insurance Agencies, Inc., an insurance agency that is a
subsidiary of the Bank. Mr. Bradford was a co-owner of the
insurance agency prior to its acquisition by the Bank in January
1996. Mr. Bradford has been a director of the Corporation since
1986 and a director of the Bank since 1974.
LEWIS G. EMMONS (age 53) is President and a director of
Emmons Development-Real Estate and Special Projects Coordinator
for Great Day Food Stores. Mr. Emmons has been a director of the
Corporation since 1986 and a director of the Bank since 1978.
-6-
<PAGE>
STUART GOODFELLOW (age 54) owns Goodfellow Blueberry Farms
and Goodfellow Vending Services, a vending company. Mr.
Goodfellow is also past Vice President and a director of the
Michigan Blueberry Growers Association. Mr. Goodfellow has been
a director of the Corporation and the Bank since August 1991.
DIRECTORS WITH TERMS EXPIRING IN 2000
WILLIAM F. CUTLER, JR. (age 50) is the former Vice President
of the H. H. Cutler Company, an apparel manufacturer. Mr. Cutler
joined the H. H. Cutler Company in 1970 and served in various
management and executive capacities until January 1994. The H.
H. Cutler Company was sold to VF (Vanity Fair) Corporation in
January 1994. Mr. Cutler has been a director of the Corporation
and the Bank since October 1993. Mr. Cutler served as a director
of the Sparta Health Center from 1981 until 1996 and is a trustee
of the Rockford Education Foundation.
L. EDMOND EARY, JR., M.D. (age 69) retired in 1991 after
establishing and operating a solo medical practice for 38 years.
Dr. Eary was an Associate Professor of Family Practice at the
College of Human Medicine at Michigan State University from July
1972 until June 1988. Dr. Eary has been a director of the
Corporation since 1986 and a director of the Bank since 1969.
Dr. Eary has been Chairman of the Board of Directors of the
Corporation and the Bank since May 1991 and was Vice Chairman of
the Board of Directors of the Corporation and the Bank from May
1990 until May 1991. Dr. Eary served as Interim President and
Chief Executive Officer of the Corporation from October 1, 1994
until January 10, 1995. Dr. Eary is also a director of Northwest
Ambulance Corp., a non-profit corporation, and Past President,
director and Treasurer of the Michigan Academy of Family
Physicians.
ANDREW W. ZAMIARA (age 57) is a registered pharmacist and
President/Manager of Momber Pharmacy and Gift Shop in Sparta,
Michigan. Mr. Zamiara has been a director of the Corporation and
the Bank since August 1990.
DIRECTORS WITH TERMS EXPIRING IN 1999
JAE M. MAXFIELD (age 52) has been a director and President
and Chief Executive Officer of the Corporation and the Bank since
January 1995 and a director of ChoiceOne Insurance Agencies, Inc.
since January 1996. From 1993 until January 1995, Mr. Maxfield
operated Maxfield Associates, an association of financial
advisors engaged in providing financial services to business and
professional occupations. Mr. Maxfield served as President and
-7-
<PAGE>
Chief Executive Officer of Society Bank in Monroe, Michigan,
formerly a subsidiary of First of America Bank, from 1974 until
1993. Mr. Maxfield also is a director of West Shore Computer
Services, Inc., a data processing company, in which the Bank owns
a 20% interest and a director of Michigan Bankers Title of West
Michigan, L.L.C., a title insurance agency, in which the Bank
owns a 6% interest.
JON E. PIKE (age 56) is a certified public accountant and
Managing Partner of Beene, Garter LLP, certified public
accountants, of Grand Rapids, Michigan. Mr. Pike has been a
director of the Corporation and the Bank since September 1990.
Mr. Pike is also a director of Wm. A. Rogers & Co., a retail
hardware business in Sparta, Michigan, and President and a
director of B.G. Systems, Inc., a computer software business
affiliated with Beene, Garter LLP.
LINDA R. PITSCH (age 50) has been a director of the
Corporation and the Bank since December 1994 and Secretary of the
Corporation and the Bank since February 1995. Ms. Pitsch also
has served as Senior Vice President and Cashier of the Bank since
January 1993. Ms. Pitsch has been an employee of the Bank since
September 1969, serving in various management and executive
capacities. Ms. Pitsch is also a director and Past President of
the Grand Rapids Chapter of the American Institute of Banking and
an instructor at Davenport College of Business, serving on its
Accounting Advisory Board.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
DENIS L. CROSBY (age 55) has been Vice President of the
Corporation since 1991. Mr. Crosby has been Senior Vice
President of Loans at the Bank since 1990 and Vice President of
Loans at the Bank since 1986. From 1972 until joining the
Corporation in 1986, Mr. Crosby was a commercial loan officer at
various affiliates of Michigan National Bank. Mr. Crosby is a
member of the Sparta Downtown Development Authority and a member
of the Economic Development Foundation of Western Michigan.
GERALD P. DAVID (age 59) has been Senior Vice President of
the Bank since 1984 and has served in various capacities at the
Bank in the Operations division since July 1976. Prior to his
employment at the Bank, Mr. David was associated with Old Kent
Bank. Mr. David serves as President of the Mid Michigan Bank
Administration Institute Chapter.
THOMAS L. LAMPEN (age 42), a Certified Public Accountant,
has been Vice President and Chief Financial Officer of the Bank
-8-
<PAGE>
since January 1992 and Treasurer of the Corporation since
April 1987. Prior to his employment with the Corporation, Mr.
Lampen worked for Alexander Grant and Company, a national
accounting firm.
BOARD COMMITTEES AND MEETINGS
The Corporation's Board of Directors has, among others, the following
standing committees:
AUDIT COMMITTEE. The members of the Audit Committee as of March 16,
1998, were Jon E. Pike (Chairman), L. Edmond Eary, M.D., Lewis G. Emmons
and Stuart Goodfellow. The Audit Committee is responsible for causing a
suitable examination of the financial records and operations of the
Corporation and the Bank to be made by the internal auditor of the
Corporation through a program of continuous internal audits. The Audit
Committee recommends to the Corporation's Board of Directors independent
certified public accountants for employment to examine the financial
statements of the Corporation and make such additional examinations as the
committee considers advisable. The Audit Committee also reviews reports of
examination of the Corporation and the Bank received from regulatory
authorities and reports to the Board of Directors at least once each
calendar year the results of examinations made and such conclusions and
recommendations as the committee considers appropriate concerning the scope
of the Corporation's and the Bank's procedures for internal auditing and
the results thereof. The Audit Committee met four times during 1997.
PERSONNEL AND BENEFITS COMMITTEE. The members of the Personnel and
Benefits Committee as of March 16, 1998, were Andrew W. Zamiara (Chairman),
William F. Cutler, Jr., Lewis G. Emmons, Stuart Goodfellow and Jae M.
Maxfield. Mr. Maxfield is a non-voting member of this committee. The
Personnel and Benefits Committee performs the function of a compensation
committee and receives recommendations from senior management and makes
recommendations to the Board of Directors concerning the compensation and
benefits of the officers of the Corporation and the Bank. The Personnel
and Benefits Committee also reviews the provisions of the Personnel Manual
and sets the parameters for the Bank's incentive bonus plan. This
committee also administers the Bank's pension plan. The Personnel and
Benefits Committee met five times during 1997.
EXECUTIVE AND LOAN REVIEW COMMITTEE. The members of the Executive and
Loan Review Committee as of March 16, 1998, were L. Edmond Eary, M.D.
(Chairman), Frank G. Berris, Lawrence D. Bradford, William F. Cutler, Jr.,
Lewis G. Emmons, Stuart Goodfellow, Jae M. Maxfield, Jon E. Pike, Andrew W.
Zamiara and Denis L. Crosby. Mr. Crosby is an executive officer of the
Bank. This committee reviews all aspects of loan activity for the Bank for
the preceding months, including new loans of $25,000 or more, problem loans
and loans identified by examiners, loans 60 days or more past due and
-9-
<PAGE>
non-accrual loans. This committee also approves loan charge-offs and
extensions of credit of up to 15% of the capital and surplus of the Bank.
The Executive and Loan Review Committee may also act in other capacities as
authorized by the Board of Directors. The Executive and Loan Review
Committee met nine times in 1997.
BRANCHING AND ACQUISITIONS COMMITTEE. The members of the Branching
and Acquisitions Committee as of March 16, 1998, were Frank G. Berris,
Lawrence D. Bradford, William F. Cutler, Jr., L. Edmond Eary, M.D., Jae M.
Maxfield and Jon E. Pike. The purpose of this committee is to consider
potential acquisitions by the Bank and/or the Corporation. The Branching
and Acquisitions Committee did not meet in 1997.
COMPLIANCE/CRA COMMITTEE. The members of the Compliance/CRA Committee
as of March 16, 1998, were Linda R. Pitsch (Chairperson), Lawrence D.
Bradford, Jae M. Maxfield and the following individuals who are officers of
the Bank: Mary J. Johnson, Karen M. Gilbert, James Beckman, Kelly Potes and
Denis L. Crosby. The Compliance/CRA Committee is responsible for
compliance with various federal banking regulations and the Community
Reinvestment Act of 1977. The Compliance/CRA Committee met three times in
1997.
NOMINATING COMMITTEE. The members of the Nominating Committee as of
March 16, 1998, were William F. Cutler, Jr., Jae M. Maxfield and Jon E.
Pike. This committee was established in February 1998 and did not meet in
1997. The Corporation will consider nominations of candidates for the
Board of Directors submitted by shareholders. Any shareholder who desires
to nominate a candidate for the Board of Directors at a meeting must
deliver, not less than 120 days prior to the date of notice of the meeting
in the case of an annual meeting, and not more than seven days following
the date of notice of the meeting in the case of a special meeting, a
notice to the Secretary of the Corporation setting forth: (i) the name,
age, business address and residence address of each nominee proposed in
such notice; (ii) the principal occupation or employment of each such
nominee; (iii) the number of shares of capital stock of the Corporation
which are beneficially owned by each such nominee; (iv) a statement that
each such nominee is willing to be nominated and serve; and (v) such other
information concerning each such nominee as would be required under the
rules of the Securities and Exchange Commission in a proxy statement
soliciting proxies for the election of such nominees.
During 1997, the Corporation's Board of Directors held 12 regular and
special meetings. All directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and meetings of committees on
which they served during the year.
-10-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires directors and officers of the Corporation and persons beneficially
owning more than 10% of the outstanding shares of Common Stock to file
reports of beneficial ownership and changes in beneficial ownership of
shares of Common Stock with the Securities and Exchange Commission.
Directors, officers and greater than 10% beneficial owners are required by
Securities and Exchange Commission regulations to furnish the Corporation
with copies of all Section 16(a) reports they file. Based solely on its
review of the copies of such reports received by it or written
representations from certain reporting persons that no Forms 5 were
required for those persons, the Corporation believes that all applicable
Section 16(a) reporting and filing requirements were satisfied from
January 1, 1997, through December 31, 1997, except that one report covering
one transaction was filed late on behalf of William F. Cutler, Jr., one
report covering one transaction was filed late on behalf of Lewis G.
Emmons, one report covering one transaction was filed late on behalf of Jae
M. Maxfield and one report for Mr. Maxfield that was filed on a timely
basis inadvertently omitted one transaction. These delinquencies were due
to inadvertent oversights by the Corporation's personnel and appropriate
reports were filed to correct them as soon as they were discovered.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
GENERAL. The following table shows certain information concerning
the compensation earned by the Chief Executive Officer of the Corporation
during 1997 for services rendered to the Corporation or the Bank during
each year in the three-year period ended December 31, 1997, in which such
individual served as an executive officer of the Corporation or the Bank.
No other executive officer of the Corporation had cash compensation in
excess of $100,000 during 1997. Mr. Maxfield was compensated by the Bank
in the capacity indicated in the table.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM COMPENSATION
----------------------
AWARDS
NAME AND ANNUAL COMPENSATION ----------------------
PRINCIPAL ------------------- NUMBER OF SHARES ALL OTHER
POSITION YEAR SALARY<F1> BONUS<F2> UNDERLYING OPTIONS COMPENSATION<F3>
-------- ---- ---------- --------- ---------------------- ----------------
<S> <C> <C> <C> <C> <C>
Jae M. Maxfield 1997 $115,600 $17,092 5,000 $15,489
Director, President and Chief 1996 107,800 40,917 -- 25,091
Executive Officer of the 1995 100,800 30,900 -- 7,797
Corporation and the Bank
-11-
<PAGE>
<FN>
- ----------------------------------------
<F1> Includes compensation deferred under the Bank's 401(k) and Employee
Stock Ownership Plan and director fees paid by the Corporation and the
Bank.
<F2> Includes compensation deferred under the Bank's 401(k) and Employee
Stock Ownership Plan.
<F3> All other compensation for Mr. Maxfield in 1997 includes amounts paid
by the Bank for (i) life and disability insurance ($1,254); (ii) Bank
contributions under the Bank's 401(k) and Employee Stock Ownership
Plan ($10,156); and (iii) storage expenses associated with Mr.
Maxfield's initial employment by the Corporation ($4,079).
</FN>
</TABLE>
The following tables set forth information regarding stock options
granted to Mr. Maxfield during the last fiscal year and stock options held
by him at the end of the last fiscal year. Mr. Maxfield did not exercise
any stock options during 1997.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED
UNDERLYING TO EMPLOYEES IN
NAME OPTIONS GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION DATE
- ------------------ -------------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C>
Jae M. Maxfield 5,000 100% $ 40.00 6-29-2007
<FN>
- --------------------------------
<F1> To provide an incentive for Mr. Maxfield and to help align his
economic interests with those of the Corporation's shareholders,
effective as of June 30, 1997, the Personnel and Benefits Committee of
the Board granted an option to Mr. Maxfield to purchase up to an
aggregate of 5,000 shares of Common Stock at a price of $40.00 per
share.
The option provides for delayed vesting so that 25% of the shares
subject to the option became exercisable on June 30, 1997. Thereafter,
an additional 25% of the option becomes exercisable on each
anniversary of the date of the award if Mr. Maxfield is then employed
by the Corporation. The option remains outstanding for ten years from
the date it was granted. The option is non-transferable.
-12-
<PAGE>
Under the terms of the option, the option is not an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The option was not subject to tax when it was
granted. Upon exercise, Mr. Maxfield will recognize compensation
income in the amount of the spread between the market value of the
underlying shares of Common Stock and the option exercise price. The
Corporation will receive a corresponding deduction. The option price
must be paid in cash or shares of stock of the Corporation, valued at
the market value on the date of exercise.
</FN>
</TABLE>
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END <F1>
--------------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jae M. Maxfield 1,250 3,750 $ 3,600 $10,800
<FN>
- --------------------
<F1> Based on a market value of $42.88 per share at December 31, 1997,
adjusted to reflect stock dividends.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS. Mr. Maxfield has an employment agreement with
the Bank. Under this agreement, Mr. Maxfield shall be employed as
President and Chief Executive Officer of the Bank and the Corporation
unless his employment is terminated by him or he is dismissed at the
pleasure of the Board of Directors of the Bank. Under this agreement, Mr.
Maxfield is entitled to a base salary to be reviewed annually by the Board
of Directors of the Bank, participation in the Bank's incentive bonus plan,
payment of director fees normally payable to directors of the Corporation
and the Bank for meetings attended and other benefits generally available
to all Bank employees. Mr. Maxfield has agreed not to compete in any way
with the business of the Bank and the Corporation while in the employ of
the Bank and for one year after termination of his employment with the
Bank.
401(K) PLAN. The ChoiceOne Bank 401(k) Retirement Savings Plan was
amended to become the ChoiceOne Bank 401(k) and Employee Stock Ownership
Plan ("401(k) Plan") effective January 1, 1997. The 401(k) Plan remains
qualified under Section 401(a) of the Code.
-13-
<PAGE>
The purpose of the 401(k) Plan is to permit Bank employees, including
Mr. Maxfield, to save for retirement on a pre-tax basis. In addition to
the pre-tax contributions by Bank employees, the Bank may make
discretionary matching and/or employee stock ownership plan ("ESOP")
contributions to the 401(k) Plan. If matching and/or ESOP contributions
are made to the 401(k) Plan, a participant is fully vested in those
contributions after six years of vested service.
Each participant in the 401(k) Plan has an account to record the
participant's interest in the plan. The amount of the contributions made
by or on behalf of the participants are credited to their accounts. A
participant's benefit from the 401(k) Plan is equal to the vested amount
in the participant's account under the plan when he or she terminates
employment with the Bank. By adding the ESOP provisions, part of the
401(k) Plan is now designed to invest primarily in stock of the
Corporation.
INCENTIVE BONUS PLAN. The Bank's incentive bonus plan (the "Bonus
Plan") was established for all of the Bank's officers in 1985. The Bonus
Plan has applied to all employees (both officer and non-officer personnel)
since the 1986 fiscal year. The purposes of the Bonus Plan are to (i)
motivate all personnel of the Bank, (ii) encourage growth of profits and
maximization of return on equity and (iii) provide an opportunity for
participants to be rewarded for individual effort and performance that is
considered by the Personnel and Benefits Committee to be above average.
The Bonus Plan is based on return on equity. A funding range of
11.25% through 12.25% was established for 1997. If return on equity is
below 11.25%, or the "threshold," no bonus based on Bank profits will be
paid. Bonuses payable under the Bonus Plan begin to accrue at 11.25%
return on equity. One quarter of the targeted bonus amount is payable for
each one quarter of one percentage point increase in return on equity above
11.25%, with 100% of the targeted bonus amount payable at 12.25% return on
equity. There was no maximum bonus payable under the Bonus Plan, such that
any increase in return on equity over 12.25% provided a bonus greater than
100% of the targeted bonus.
Determinations of eligibility, funding, allocations and amounts of
awards are subject to the review and final approval of the Board of
Directors of the Bank. The Bank's executive officers, as a group, who are
also executive officers of the Corporation, received incentive bonuses
totaling $39,663 under the Bonus Plan for the 1997 fiscal year.
PENSION PLAN. The ChoiceOne Bank Pension Plan (the "Pension Plan") is
a defined benefit plan adopted as of April 1, 1968. The Pension Plan is
qualified under Section 401(a) of the Code. The cost of the Pension Plan
is borne entirely by the Bank. The purpose of the Pension Plan is to
provide retirement benefits to Bank employees. Each participant is fully
vested after six years of vested service.
-14-
<PAGE>
Subject to certain minimums, the monthly normal retirement benefit is
equal to 1.1% of the participant's average monthly compensation multiplied
by the participant's years of vested service (without limit on amount),
plus 0.6% of the participant's average monthly compensation in excess of
covered compensation multiplied by his or her years of vested service (up
to a maximum of 35 years). "Average monthly compensation" means the
monthly average of the participant's compensation during the five
consecutive plan years in which the participant was most highly compensated
during the 10 plan years immediately preceding the participant's
termination of employment. "Covered compensation" means the greater of (i)
$1,000 or (ii) one twenty-fourth (1/24) of the covered compensation
(determined under regulations issued by the Internal Revenue Service) of an
individual who attains social security retirement age in the plan year in
which the benefit is calculated. Election of available joint and survivor
benefits, early retirement benefits and other payment options would reduce
monthly retirement benefits.
Since retirement benefits under the Pension Plan are based in
substantial part upon compensation during the 10 years before termination
of employment, it is not possible to predict accurately the annual
retirement benefits to be paid to any participant. The Pension Plan Table
set forth below shows estimated annual benefits payable under the Pension
Plan upon retirement to persons in the compensation and years-of-service
classifications listed in the table.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
AVERAGE
REMUNERATION YEARS OF BENEFIT SERVICE
------------ -------------------------------------------------------------------------
35 OR
10 15 20 25 30 MORE
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 20,000 $ 2,573 $ 3,859 $ 5,145 $ 6,432 $ 7,718 $ 9,005
40,000 5,973 8,959 11,945 14,932 17,918 20,905
60,000 9,373 14,059 18,745 23,432 28,118 32,805
80,000 12,773 19,159 25,545 31,932 38,318 44,705
100,000 16,173 24,259 32,345 40,432 48,518 56,605
120,000 19,573 29,359 39,145 48,932 58,718 68,505
140,000 22,973 34,459 49,945 57,432 68,918 80,405
160,000 26,373 39,559 52,745 65,932 79,118 92,305
180,000 29,773 44,659 59,545 74,432 89,318 104,205
</TABLE>
-15-
<PAGE>
As of March 16, 1997, Mr. Maxfield had two years of service under the
Pension Plan. Covered compensation for the individuals named in the
Summary Compensation Table above is substantially the same as the aggregate
amount reported as "Annual Compensation" in that table.
The Pension Plan was terminated effective April 1, 1997. Benefit
obligations were paid to plan participants during 1997.
During 1997, the Corporation compensated its directors at the rate of
$50 per monthly meeting of the Board attended and an additional $200 for
each quarterly meeting of the Board attended. Directors who were not
employees of the Corporation or the Bank received $60 per hour for each
meeting of any committee of the Board of Directors on which they served
other than the Executive and Loan Review Committee. During 1997, the Bank
compensated its directors at the rate of $350 per meeting attended. The
Chairman of the Board of the Bank received an additional $100 per meeting
attended.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors, nominees for director and executive officers of the
Corporation and members of their immediate families were customers of and
had transactions with the Bank in the ordinary course of business between
January 1, 1997, and March 16, 1998. It is anticipated that such
transactions will take place in the future in the ordinary course of
business. All loans and commitments included in such transactions were
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other persons and did not involve more than the normal risk of
collectibility or present other unfavorable features.
Effective January 1, 1996, the Bank, through a merger of a wholly-
owned subsidiary of the Bank, acquired all of the outstanding stock of
Bradford Insurance Centre, Ltd. (now named ChoiceOne Insurance Agencies,
Inc.) (the "Agency"). Mr. Bradford and his two brothers each received
6,870 shares of the Corporation's Common Stock, valued at approximately
$259,350 for purposes of the transaction, in exchange for the outstanding
shares of the Agency. In connection with the transaction, Mr. Bradford,
his son and his nephew each entered into an employment agreement with the
Agency. Under the terms of these agreements, each individual will be
employed for an initial term of three years, will receive a base salary and
will participate in a bonus pool based on the income of the Agency as
compared to the Bank's investment in the Agency. In return, each
individual agreed to certain covenants, including covenants not to compete
with the Agency for specified periods of time.
-16-
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Crowe, Chizek and Company LLP, certified public accountants, served as
the Corporation's principal accountant for 1997. The Board of Directors of
the Corporation has selected Crowe, Chizek and Company LLP to act as the
Corporation's principal accountant for 1998. Representatives of Crowe,
Chizek and Company LLP are not expected to be present at the Annual
Meeting. If a representative of Crowe, Chizek and Company LLP attends the
meeting, the representative will have an opportunity to make a statement
and will be expected to be available to respond to appropriate questions.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1999 annual
meeting of shareholders must be received by the Corporation for
consideration for inclusion in its proxy statement and form of proxy
relating to that meeting by December 2, 1998. Proposals of shareholders
should be made in accordance with Securities and Exchange Commission
Rule 14a-8.
FORM 10-KSB REPORT AVAILABLE
THE CORPORATION'S FORM 10-KSB ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES, WILL BE PROVIDED WITHOUT CHARGE TO SHAREHOLDERS UPON WRITTEN
REQUEST. REQUESTS SHOULD BE DIRECTED TO MR. THOMAS L. LAMPEN, TREASURER,
CHOICEONE FINANCIAL SERVICES, INC., 109 EAST DIVISION, SPARTA, MICHIGAN
49345.
-17-
<PAGE>
CHOICEONE FINANCIAL SERVICES, INC.
P R O X Y 109 EAST DIVISION P R O X Y
SPARTA, MICHIGAN 49345
ANNUAL MEETING OF SHAREHOLDERS - APRIL 30, 1998
The undersigned shareholder appoints Jae M. Maxfield and Linda R.
Pitsch, or either of them, each with the power to appoint his or her
substitute, attorneys and proxies to represent the shareholder and to vote
and act, with respect to all shares that the shareholder would be entitled
to vote at the annual meeting of shareholders of ChoiceOne Financial
Services, Inc. referred to above and any adjournment of that meeting, on
all matters that come before the meeting.
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as indicated below) to vote for all nominees
listed below
Frank G. Berris Lawrence D. Bradford Lewis G. Emmons Stuart Goodfellow
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES
2. Proposal to Approve and Adopt an Amendment to the Restated Articles of
Incorporation to Increase the Number of Authorized Shares of Common
Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. IF THIS PROXY
IS PROPERLY EXECUTED AND DELIVERED, THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL
BE VOTED FOR ELECTION OF ALL NOMINEES NAMED ON THIS PROXY AND FOR THE
PROPOSAL IDENTIFIED ABOVE. THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS THAT MAY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OF THE MEETING.
<PAGE>
Dated: __________________, 1998 Please sign exactly as your name
appears on this proxy. If signing
for estates, trusts or
corporations, title or capacity
should be stated. IF SHARES ARE
HELD JOINTLY, EACH HOLDER SHOULD
SIGN.
___________________________________
Signature
___________________________________
Signature if held jointly
IMPORTANT -- PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE
